South Korea's Asiana Airlines to receive $1.4 billion support from creditors

South Korean creditors plan to provide 1.6 trillion won ($1.40 billion) in financial support to debt-laden Asiana Airlines Inc, the country`s finance minister said on Tuesday, alleviating liquidity problems after a bruising month. Asiana Airlines` biggest shareholder earlier this month said it would sell its entire stake worth 564 billion won as of Monday`s closing share price, in response to creditors` rejection of an earlier request for support of 500 billion won.

Creditors have now offered to buy Asiana Airlines` perpetual bonds worth 500 billion won and set a credit limit of 800 billion won, among other conditions, said Minister of Economy and Finance Hong Nam-ki. Speaking at a meeting, Hong also said creditors wanted top shareholder Kumho Industrial Co Ltd to sell its stake within this year.

State-funded Korea Development Bank, the lead creditor of Asiana Airlines - the country`s second-biggest carrier after Korean Air Lines Co Ltd - declined to comment. A spokesman for the parent group of both Asiana and Kumho Industrial said it will "do its utmost" to sell Asiana Airlines, adding that it expects to sign a preliminary deal with creditors later on Tuesday.

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Shares of Asiana Airlines and budget affiliate Air Busan Co Ltd, like those of across the industry, have been falling since crude oil prices reached six-month highs.  On Tuesday, Asian Airlines fell 4.6 percent, whereas Air Busan lost 5.8 percent. Kumho Industrial fell 3.6 percent.

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In March, auditors raised doubts about Asiana`s financial statements, after which the airline reported steeper losses and bigger debts, triggering warnings of credit-rating downgrades. Co-Chief Executive Park Sam-koo resigned to take responsibility. 
($1 = 1,139.9000 won)